This is a Shannon Award providing partial support for the research projects that fall short of the assigned institute's funding range but are in the margin of excellence. The Shannon Award is intended to provide support to test the feasibility of the approach; develop further tests and refine research techniques; perform secondary analysis of available data sets; or conduct discrete projects that can demonstrate the PI's research capabilities or lend additional weight to an already meritorious application. The abstract below is taken from the original document submitted by the principal investigator. Individuals have different beliefs about how long they will live, how healthy they will be in old age, when they will retire, and other aspects of their future. These beliefs may be important factors influencing how much individuals save for the future. The underlying goal of this project is too explore how these subjective beliefs influence saving decisions. The project uses two new panel data sets, the Health and Retirement Survey (HRS) and the Survey of Asset and Health Dynamics Among the Oldest Old (AHEAD), each of which measures subjective probabilities about mortality and other future events. Since there is virtually no past research using subjective probability measures to explain saving decisions, the project includes a number of exploratory components about the subjective data. One component is to evaluate whether people's subjective expectations are realistic. For example, as future waves of surveys become available, the project will determine whether differences in subjective expectations across individuals re realized. Specifically, how accurately do people assess differences in their mortality and other future events? Another component of the project investigates the determinants of the subjective probability distributions, and estimates specific models of the formation and evolution of subjective beliefs. The project considers several aspect of how subjective expectations influence saving decisions. First, the subjective probability distributions will be used to estimate models of saving behavior by the elderly. In particular, subjective information about mortality risk and the risk of medical expenditures will be used to estimate the role of expectations in influencing saving decisions; the importance of risk aversion; and the extent to which savings results from differences in expectations, as compared with differences in tastes. Second, the project will assess whether saving decisions are "rational," given particular expectations about the future. Third, the project will identify groups with economic hardship, and assess the extent to which their economic hardship results from poor planning, unrealistic beliefs, or bad luck. And fourth, the estimates of saving behavior will be used to forecast saving and wealth of the elderly.